NO WIDESPREAD SELL-OFF BY LANDLORDS DESPITE ATTACKS ON BUY TO LET

NO WIDESPREAD SELL-OFF BY LANDLORDS DESPITE ATTACKS ON BUY TO LET
May 28 , 2021

New figures show that there is no widespread sell-off by landlords, despite the tax and regulation changes of recent years.


Data from the Association of Residential Letting Agents, a trade body, shows that its members reported in March there was an average of just four landlords per agency branch indicating they wanted to sell.


This was exactly the same figure as in March 2019 and March 2018 – there was no comparable figure for last year, as this was during the Coronavirus market lockdown.


Mark Hayward, ARLA’s chief policy advisor, says: “It’s great to see that the rental market is continuing to boom as demand for rental properties rises. Of course, as demand rises and the number of properties decreases, rent prices will inflate, but we’d encourage agents to continue to support landlords and their tenants throughout the ongoing Covid-19 difficulties where possible and ultimately it is positive to see rent flowing and incomes returning for many people.”


Other market snapshot data from ARLA, all related to March, shows that the average number of new prospective tenants registered per letting agency branch continued to rise to 84, from February’s figure of 82. This is the third month in a row where the number of new prospective tenants has increased.


Regionally, the West Midlands had the highest number of new tenants registered per branch with an average of 157. However, this number was lowest in Scotland where there was only an average of 31 new prospective tenants registered in March.


The number of tenants experiencing rent increases jumped in March as three in five agents saw landlords increasing rent compared to 49 per cent in February. This figure is up from 30 per cent in March 2019.


The number of tenants successfully negotiating rent reductions fell to 1.7 per cent in March, falling from 2.0 per cent a month earlier.


The number of properties managed per letting agent branch fell from 195 in February to 193 in March. Regionally, the West Midlands had the highest number of properties managed per letting agent branch with a figure of 260.


However, rental stock was the lowest in London with an average of 128 properties managed per branch.


RISE IN LANDLORDS PURCHASING BTL PROPERTIES THROUGH LIMITED COMPANIES


Rising numbers of UK and international landlords are choosing to register as a limited company to manage their portfolios and to take advantage of sizeable tax benefits.


Thirlmere Deacon has seen a spike in international investors enquiring about forming a limited company, up 62 per cent year on year. It claims that further findings reveal that there were a record number of new limited companies set up in 2020, with 228,743 buy-to-let firms up and running.


Last year, there were a total of 41,700 buy-to-let incorporations, an increase of 23 per cent on 2019. The numbers have more than doubled since 2016, rising 128 per cent, when tax changes for landlords were introduced. Between the beginning of 2016 and the end of 2020 more companies were set up to hold buy-to-let properties than in the preceding 50 years combined. Companies set up to hold buy-to-let properties were the second most common company founded during 2020, with companies selling goods online or by mail order in first place.


More than a third (34 per cent) of all companies set up to hold buy-to-let properties in 2020 were in London. Together, London and the South East accounted for almost half (47 per cent) of all incorporations.


Stuart Williams, founder and CEO of Thirlmere Deacon, said: “If landlords hold property in a limited company, they have the ability to offset 100 per cent of mortgage interest against profits, while those holding a property in their own name can offset just 20 per cent. Investing in property through a company provides landlords with higher levels of tax relief and personal tax savings. Landlords can grow their BTL portfolio more quickly, as there is no income tax on the retained profit, thus allowing more cash to re-invest. Although corporation tax is payable on trading profits, this is lower than the higher income tax rate.”


He added: “However, running a portfolio through a limited company is not right for everyone. One of the main benefits of remaining a private landlord is that any post-tax profits can go straight into their pocket. Profits can be used then for anything they choose – all paid for by the tenants.”


Contact the team at Opal Property or on 0203 355 8785 if you are you looking to buy or if you have a property to sell either with tenants in situ or vacation possession.


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